Rumors, changes, and cancelled games in 2026

The final a number of months have been a curler coaster for Xbox, culminating in a sweeping wave of layoffs on July 6. Xbox CEO Asha Sharma announced that Microsoft will divest from 5 recreation studios and minimize a complete of three,200 jobs by July 2027.

Microsoft’s gaming division noticed a serious management turnover again in February, with CEO Phil Spencer abruptly leaving the corporate alongside along with his inheritor obvious Sarah Bond. Incoming CEO Asha Sharma and chief content material officer Matt Booty moved shortly to reestablish belief within the flagging model. They cut prices on Xbox Game Pass after a 50% worth hike sparked an exodus from the service. They reaffirmed that new high-end {hardware} was within the works, within the type of Project Helix. They boldly declared that their group could be known as XBOX, in all-caps. Xbox hosted a barnstorming summer showcase on June 7, and gave away lots of of translucent inexperienced Sequence X consoles to followers who attended dwell.

It appeared like every part was going nice! After which the wheels fell off the wagon. Simply three days after the showcase, on June 10, Bloomberg reported that Sharma had deliberate a large slate of layoffs that might start in July. Sharma and Booty confirmed these studies in a publish on Xbox Wire that outlined plans for a “reset” over the approaching 100 days, citing awful income, rising {hardware} prices, and extreme enlargement in the course of the pandemic years. With some 1,600 jobs misplaced on July 6 — and extra to return within the 12 months forward — it is clear the method will not be a fairly one.

It could take weeks and even months till we get a precise image of all of the adjustments happening at Xbox, however here is what we all know at current. The tales under are offered in reverse chronological order, so the latest developments will seem on the high.

A serious technique pivot at Bethesda

On July 17, Bethesda Sport Studios shared a detailed roadmap outlining the way forward for its main franchises, which embrace Fallout, The Elder Scrolls, and Starfield.

As has been broadly reported and speculated, Fallout can be a serious focus of the studio within the months and years forward, with the studio noting that “we’ve got a number of Fallout tasks in energetic growth proper now.” Bethesda additionally stated Fallout 5 “stays our long-range vacation spot,” and later says the sport is in “pre-production.” The studio additionally confirmed that “remasters for each Fallout 3 and Fallout: New Vegas” are within the works, the latter coming from Obsidian Leisure, however didn’t present any details about a launch date for both. Bethesda additionally teased a thirtieth anniversary occasion in Washington, D.C. in 2027, so we are able to most likely anticipate some readability on the timeline then.

The Elder Scrolls 6 is at the moment the group’s “main growth focus.” The studio added, “The subsequent chapter is on the way in which. We’re the place we deliberate to be, loving the way it seems, and taking part in it every single day.”

Regardless of an underwhelming PS5 launch again in April, Starfield will proceed to see additional updates and assist. “As we enter 12 months 3, we’ll proceed increasing the Settled Methods with new tales, focused gameplay enhancements, and extra updates, whereas making ready for the launch of recent Starborn content material subsequent 12 months.” Starborn content material refers to Starfield‘s post-game, so it seems like these expansions will purpose to serve the sport’s present fanbase, quite than luring in new gamers.

Large adjustments at ZeniMax

The studio behind The Elder Scrolls On-line has made some important adjustments to senior management in current weeks, in response to a July 15 report from Stephen Totilo at Game File. Whereas it was not clear when Xbox first introduced the layoffs, we now know ZeniMax studio misplaced 379 staff in Microsoft’s newest spherical of cuts, together with studio head Joe Burba, who had been there for 14 years.

A number of growth leads on ESO can even go away the corporate, together with govt producer Susan Kath, studio recreation director Wealthy Lambert, and manufacturing director Ala Diaz. In line with Sport File, these 4 senior staffers knowledgeable colleagues that the transiition will happen “over the following few months,” and that they plan to “stay in place in the course of the transition interval to assist guarantee a easy handoff.”

Morale in the bathroom

Picture: Xbox

In line with a July 15 report from GameDeveloper, remaining staffers at Xbox’s secure of studios are understandably anxious after the corporate’s fifth wave of layoffs since January 2024. One supply advised the outlet that 136 folks at id Software program have been laid off concurrently in a name that lasted lower than 60 seconds throughout this newest spherical of cuts.

One supply at id questioned why the adjustments got here simply sooner or later earlier than the launch of the studio’s main enlargement for Doom: The Darkish Ages on July 7. “They did not even wait to see if the product is profitable earlier than they removed the group,” they defined. “There are not any advantages to being owned by Microsoft.”

“I don’t understand how anybody remaining at Xbox studios can really feel protected realizing one other 1600 cuts are coming. And even then, what occurs after June 2027? Will we get layoffs in July for the third 12 months in a row?” one other supply advised GameDeveloper.

Making sense of the layoffs

A day after Sharma’s July 6 memo, we’re beginning to get a clearer image of what is going on on on the Xbox studios that are not going independent or being acquired by new owners.

• The Elder Scrolls On-line developer ZeniMax On-line Studios has been “seemingly gutted,” in response to a Kotaku report.
• Doom and Wolfenstein developer Id Software program reportedly misplaced as many as 95 staffers, according to VGC.
• Obsidian Leisure — the developer behind The Outer Worlds, Pentiment, and Grounded — has reportedly misplaced 25% of its workers within the cuts, which shakes out to roughly 60 to 70 staff. This contains the studio’s art director, who had been with Obsidian for 21 years.

Sport Move has missed the mark huge time

Picture: Microsoft

Xbox would not launch subscriber numbers for Sport Move fairly often, and when an organization does that, it normally means the numbers aren’t very spectacular. In line with a Wall Road Journal report from July 6, Sport Move at the moment has 30 million subscribers — that is fewer than half of the 77 million gamers the corporate had hoped to succeed in by July 2026, in response to Microsoft courtroom filings from its Federal Commerce Fee trial over the Activision deal. The final time Microsoft publicly reported the variety of Sport Move subscribers was in February 2024, when the service had 34 million customers. Clearly, Sport Move hasn’t fairly recovered from these eye-watering October 2025 worth hikes, even after they have been rolled again earlier this 12 months.

3,200 layoffs at Xbox by July 2027

In a memo to the group that was later posted publicly on Xbox Wire, Sharma detailed what number of jobs could be eradicated. Although Microsoft eradicated 1,600 Xbox jobs on July 6, sadly, there’s nonetheless extra to return within the months forward.

After cautious consideration, I’ve made the tough resolution to scale back our group by roughly 3,200 all through FY27. It will embrace roughly 1,600 function eliminations in the present day, and as well as, 4 studios will go away XBOX to new administration. I acknowledge {that a} year-long restructuring creates further challenges. Sadly, it isn’t potential to make all the required adjustments in a single day, and I wished to be direct concerning the scale.

5 studios will go away Xbox

Picture: Double Effective Productions / Xbox Sport Studios

As a part of the wave of stories on July 6, Sharma additionally introduced that several studios will either go independent or be acquired by new homeowners. These embrace:

• Compulsion Video games (unbiased)
• Double Effective Productions (unbiased)
• Ninja Principle (new homeowners)
• Undead Labs (new homeowners)
• Arkane Lyon (standing at the moment unclear as a result of French labor legislation)

No first-party video games cancelled… for now

In her July 6 memo to workers, Sharma stated, “None of our first social gathering publicly introduced video games or tasks are being cancelled as a part of these reductions.” Rumors had swirled in current weeks relating to the destiny of Ninja Principle’s Senua and Undead Labs’ State of Decay 3, which had been prominently featured within the Xbox Showcase occasion on June 7.

The destiny of Arkane’s troubled Marvel challenge, Blade, stays unclear at current. In line with Game File, the studio “can also be slated for an exit. Given native legal guidelines, although, Microsoft has been unable to discover its future—starting from sale, to administration buyout to shutdown—till in the present day.” We cannot know for certain whether or not Blade will see the sunshine of day till the studio’s destiny is finalized, which can take months.

A digital-only future

On July 1, Sony introduced it might not make bodily recreation discs for video games launched after January 2028. That very same day, reporting from The Verge claimed Xbox is engaged on a strategy to digitize physical game discs. Primarily, you’d insert a disc after which be granted an extra digital copy. These copies could be bought and borrowed, just like Nintendo’s game-key cards.

Bond developer caught within the crossfire

On June 30, IO Interactive cryptically introduced on X {that a} “relationship with an exterior companion on our personal IP, Venture Fantasy, has come to an finish.” It was quickly confirmed that Xbox was the external partner pulling out of the deal. IO will proceed growing Venture Fantasy, however stated it should make “staffing choices” in response to the funding change, which does not sound nice.